– NISCHAL DHUNGEL

The opinion piece originally appeared in The Kathmandu Post on 11 August 2023. Please read the original article here.

The digital age represents a transformative era characterised by the extensive use of digital technology in various aspects of human life, including politics, economy and social interactions. It is driven by incorporating and assimilating cutting-edge digital technologies, such as fifth-generation (5G) mobile networks, the Internet of Things (IoT), cloud computing, artificial intelligence, big data analysis and robotics. This signifies a transition from a hyperconnected world to a realm of digitised economies and societies. These developments blur the distinction between digital and traditional economies and foster disruptive technologies that fuel growth and innovation, shaping what economists call a “digital economy”.

Initiated in the 1970s with the advent of the microprocessor and personal computer, the digital revolution, driven by information and communication technologies (ICTs), has profoundly transformed our lives. At the core of this transformation lies a techno-economic paradigm (TEP), a framework guiding innovation and investment. Many view the digital revolution as a new TEP, with data propelling the digital revolution forward. The application of data within the digital revolution will remain the driver for economic growth and innovation in the future.

Data access and sharing

Data access and sharing can yield substantial social and economic advantages of three kinds: Direct, indirect and induced. Direct benefits primarily serve the data provider, increasing revenue and productivity; indirect benefits extend to suppliers and data users, fostering the creation of new products and services; and induced benefits reach the broader economy, fostering enhanced innovation and productivity. The extent of these benefits depends on the specific sector, the nature of the data and the method of sharing.

Nevertheless, numerous studies have demonstrated significant benefits. For instance, when it comes to public-sector data, enabling data access and sharing has shown the potential to yield social and economic advantages equivalent to 0.1-1.5 percent of GDP. For private-sector data, the benefits of data access and sharing have been found to account for 1-2.5 percent of GDP, with some studies suggesting even higher figures, up to 4 percent. Data access and sharing benefit innovation, decision-making and efficiency. Sharing data enables governments, businesses and organisations to access new ideas and insights, leading to the development of innovative products, services and processes. It also improves decision-making by providing deeper insights into the economy, customers, markets and competitors.

Weak digital foundations

The fundamental pillars in Nepal necessary for ensuring resilient digital service delivery are not very robust. The United Nations e-Government Development Index ranks Nepal 132 out of 193 countries. This ranking reflects a low standing due to significant weaknesses or absences in crucial elements of the digital government ecosystem. Insufficient infrastructure capabilities, such as limited capacity and resilience of government data centres, hinder public and private service delivery.

Additionally, there are issues related to poor coordination among government agencies, constraints in institutional capacity, inadequate funding and deficiencies in foundational elements like identification and digital signatures. Building a solid foundation on these issues will be crucial for Nepal to graduate to a middle-income country, as it aims to transform a knowledge-based economy with ICT playing a pivotal role in driving its growth.

Data centricity and API

Nepal must recognise the significance of data centricity, ensuring that data is accessible, usable and actionable at all levels of government. Governments should strengthen public trust by openly publishing data sets, free for public use, in formats that prevent information manipulation. This commitment to open government data aids in enhancing transparency, combating corruption and bolstering public sector accountability. The growing interest in open-source software is also contributing to development efforts. Leveraging open application programming interfaces (APIs) will further streamline access to public sector information through user-friendly applications, benefiting citizens.

The world is witnessing a surge in API development and the prominence of open data. Integrating online public data with mobile applications will become more commonplace, and open APIs play a vital role in this process, especially with the digitalisation of back-office operations. This advancement ensures government agencies can efficiently offer access to core information and transactional systems via accessible interfaces.

Private sector collaboration

The government can collaborate with private sector entities like GivingbackAI, which aims to create publicly available databases and information ecosystems from various government levels. Currently in its initial stage, GivingbackAI is focused on providing reliable data and making them accessible through its portal. They have introduced the OpenSourceNepal API, explicitly focusing on maintaining data repositories. The API has already been released for administrative units and economic data such as remittance, forex reserve, import and export. It is crucial to adopt these APIs and dashboards to avoid duplicating efforts. Various stakeholders like governments, businesses and researchers can build custom solutions using this API.

GivingbackAI aims to maintain publicly available data to facilitate evidence-based, data-driven decisions in Nepal, addressing local development issues. When the data is available on the GivingbackAl platform, policymakers and the general public can understand how current policies are successfully implemented or how the government can efficiently allocate resources to implement the policies at the grassroots level. The government can leverage technology to bring cutting-edge solutions to complex engineering, business and societal problems by supporting such innovative businesses.

Developing efficient and effective public data can enhance transparency, accountability and user empowerment. Moreover, GivingbackAI also has an education component known as Givingback AI Education, offering free hands-on courses on how to use its API, data visualisation etc., which esteemed software engineers train to produce the next generation of tech leaders in the country. GivingbackAI adopts a two-way approach, working with governments to shape AI development and with grassroots economies to empower local communities. The goal is to achieve sustained equilibrium for prosperity and inclusive growth.

More digital infrastructure

Nepal is well-positioned to improve its digital infrastructure and climb the development ladder. Economic Survey 2022-23 findings indicate that 95 percent of the total population has access to electricity, while internet usage is reported at 130.64 percent of the total population. The Internet is essential for Nepal’s digital economy, and the country’s technology and communication sector has grown significantly. The government is testing 5G technology alongside existing 3G and 4G services. The country has already shown great success with digital adoption, increasing mobile and Internet penetration. This is higher than many other developing countries in South Asia, and it is predicted that Nepal will have the highest Internet penetration by 2025.

Nepal’s future relies on digitalisation and digital governance, and this requires investing in digital infrastructure and promoting digital literacy. While there has been some progress in data sharing, there are efficiency issues that need to be addressed. The government launched initiatives like the Digital Nepal Framework 2019 to make Nepal a digital hub. To materialise the DNF, heavy investment in infrastructure, such as broadband internet and data centres, is needed to maintain a central data repository for informed decision-making, tracking development progress, and assessing development results. Leveraging open APIs and collaborating with private sector entities like GivingbackAI can further enhance data accessibility and streamline access to public information, benefiting citizens and promoting transparency.

– SANTOSH SHARMA POUDEL

The column originally appeared in The Diplomat on 31 July 2023. Please read the original article here.

Nepal is engaged in a fierce debate about rightsizing its army.

Statements by two members of parliament ignited the debate. On June 20, parliamentarian Swarnim Waglé warned that Nepal is headed to a disaster if the “difficult” decision of rightsizing the military is not taken. Citing the reduction of troops in Sri Lanka in the wake of the economic crisis, the Rashtriya Swatantra Party MP said that Nepal did not need 90,000 troops.

Ten days later, former Foreign Minister Bimala Rai Poudyal questioned the utility of a large troop force during peacetime. She argued that the risk of a physical attack on Nepal from the neighboring countries was low and pointed out that even if they did attack, the Nepali Army could not win against them.

The statements triggered a furor on social and traditional media. Following criticism from the public and senior retired military personnel, the two clarified or toned down their statements. Waglé conceded that “whatever is done should be done with the consent of the security agencies.” Similarly, Poudyal explained that she was merely “seeking an answer from the government and defense minister whether we need the current size of Nepal Army.”

Defense Minister Purna Bahadur Khadka has clarified that there is no plan to reduce the army’s size.

The argument for downsizing the military is often based on the economic costs of maintaining the 96,000-strong force, although Poudyal denied making such an argument.

Nepal allocated 58.84 billion Nepali rupees ($450 million), accounting for 3.5 percent of the total government expenditure for 2023-24.

As the graph below shows, the military budget, as a proportion of government expenditure, increased significantly since 2001, when the Nepal Army was mobilized to counter the Maoist insurgency. It reached its peak in 2005 and has declined consistently since. Nepal’s military expenditure, whether measured as a proportion of government expenditure or GDP, is below the world average. Thus, there is little economic rationale for downsizing the budget of the defense agency or troop size to cut costs.

However, the Nepal Army spends 90 percent of its allocated budget on recurrent expenditure and only 9.6 percent on capital expenditure. This is more worrying, for it means that the Nepal Army is investing less in the future. Any downsizing of the military, without reducing the overall budget, would free a larger share of the budget for the military to invest in modern technologies for the future.

The size of the army also becomes an issue because of the expanding footprint of the military into non-core areas, such as the construction of infrastructure and even business ventures. As a result, the army has become sluggish regarding combat readiness and deployment.

Hence, the debate is not about merely downsizing to cut costs but professionalizing the military.

The more pertinent question raised by Poudyal relates to the overall “utility” of the military. Citing repeated instances of border encroachment, she alleged that the army has failed in its primary role: to protect Nepal’s sovereignty and territorial integrity. Poudyal pointed out that Nepal’s army would not be able to withstand any war with neighboring countries.

Given China and India’s relative size and power, such an assumption may sound logical. Nevertheless, analyzing the role of the military in such stark terms is a gross misunderstanding and reductive. The military’s role is not just to win wars but to thwart such attacks before they happen and defend the territory if attacked.

A look at what is unfolding in Ukraine, where a relatively more minor force has been able to withstand attacks from a larger and wealthier country, gives a broader understanding of the role of the military.

Issues including the nature and the role of the military should be debated. However, ensuring that such debate is proper and not disparaging to the force that is ultimately responsible for the nation’s security is also essential.

Equally concerning is the nature of the backlash received by the parliamentarians and the defensiveness of the army.

Poudyal’s social media was flooded with comments about her being a sellout, an agent of a foreign country, or taking up the issue to weaken the military.

As a parliamentarian in a country where the army operates under civilian rule, she has every right and responsibility to debate the military’s size and role. Such debate is overdue. The size of Nepal’s military almost doubled during the Maoist insurgency, increasing from 45,000 to 96,000 now. Now that the domestic political context has changed, as have the regional and global dynamics, there should be a corresponding debate on the role and security strategy of the country.

Therefore, the defensiveness of the military force is worrying.

In March, Army Chief General Prabhu Ram Sharma dismissed the calls for downsizing by “self-proclaimed academics, experts, and security experts working in non-governmental organizations and international non-governmental organizations.” He called them “outsiders” working at the behest of foreign powers. Now, the military has responded quietly, saying that the government determines the army’s size based on the needs.

However, retired military officials have taken up the mantle of counterpunch.

Former Army Chief General Gaurav S.J.B. Rana slammed the calls for downsizing the military as “undeveloped” and “unschooled opinion.” Stating that the military is a valuable asset of the state to be cherished, Rana insisted that the “process to determine the size, composition, and capabilities of the military is best left to the military professionals, under the stewardship of the government.”

Meanwhile, another retired army chief, General Binoj Basnyat, called for doing away with the costly federal system, among others, to bring in enough resources required for national development.

Besides, both Rana and Basnyat point out that the military remains the most trusted institution in the country and, thus, should not be questioned.

As per a survey, 91.2 percent of Nepali people trusted the military, compared to 44 percent who trusted political parties. Therefore, they argue that the army is a far more responsible actor and absolved of any public debate.

Their comments imply that the Nepal Army should not be questioned. Indeed, parliamentarians are also cautious when talking about the military. Poudyal said that she was discouraged by senior leaders of different parties from talking about the military issues a few days after her statement caused public fury.

In saying that, there are commonalities between those seeking a debate on the army’s role and those defensive about any discussion. Both understand that regional and global geopolitical currents are changing rapidly; a war between two countries, seen as unlikely over the past few decades, has become a reality today.

Such geopolitical changes have thrust Nepal into the center of regional and global geopolitical tussles. Together with the changed domestic security context, a discussion of security strategy and the military’s corresponding size, shape, and form is much needed. The Nepali military of 2005 will not be able to meet the challenges of today.

However, when civilian leaders debate the size and role of the military, the military understands it as “downsizing,” making it defensive.

Therefore, the first step is bridging the trust gap between the civilian and military leadership. Then both sides can sit together and rationally chart the way appropriate for the current and future needs of the country and reform the military as per need.

– NISCHAL DHUNGEL

The opinion piece originally appeared in The Kathmandu Post on 26 July 2023. Please read the original article here.

Almost two months after the Government of Nepal unveiled its fiscal policy for 2023-24, which includes a budget of Rs1.75 trillion, the Nepal Rastra Bank (NRB), on July 23, released its monetary policy for the same fiscal year. The policy aims to support economic recovery, control inflation, stabilise interest rates and ensure credit demand. Nepal experienced a recession until the second quarter of the last fiscal year, leading to a projected annual economic growth of 1.86 percent. Despite the sluggish growth in the past year, the combination of the budget and the recent monetary policy aims to achieve an ambitious growth rate of 6 percent for the current fiscal year.

Monetary indicators

The NRB plans to control inflation by maintaining an accommodative monetary policy. The overall year-on-year consumer price inflation decreased from 8.56 percent in mid-June 2022 to 6.83 percent in mid-June 2023. Despite making profits, the Nepal Oil Corporation (NOC) has decided not to reduce the prices of petroleum products, owing to its outstanding debt. This adds to the burden on consumers, as the high petroleum product costs in Nepal significantly contribute to escalating inflation. In this context, the new monetary policy aims to maintain inflation at 6.5 percent. While the NRB is cautiously optimistic about the inflation trajectory, it remains vigilant about the potential risks that could impact price stability in the future.

The NRB aims to maintain seven months of forex reserves to cover goods and services imports in 2023-24. Based on imports during the 11 months of 2022-23, the banking sector’s forex reserves cover 11.2 months of merchandise imports and 9.6 months of both merchandise and services imports. An import ban was initially implemented to protect dwindling forex reserves, leading to an 11.5 percent increase in reserves when the ban ended. The International Monetary Fund attributes the improvement in forex reserves to monetary policy normalisation. However, import restrictions alone do not address the underlying causes of external pressures, such as persistently high global commodity prices expected in 2023 and robust domestic demand.

Policy rates

The NRB has lowered the policy rate by 50 basis points to 6.5 percent. The policy rate represents the interest rate the NRB charges to commercial banks for overnight loans. Lowering the policy rate is aimed at making borrowing more affordable for businesses and consumers and stimulating economic activity. The bank rate, however, remains unchanged at 7.5 percent. As of November of the fiscal year 2022-23, the average inter-bank rate of banks and financial institutions stood at 6.69 percent, compared to 7 percent a year earlier. Several factors, including the recent decline in inflation, influenced the NRB’s decision. To ensure credit demand, the NRB plans to provide liquidity to banks and financial institutions, reduce the policy rate and increase the lending capacity of banks.

The capital adequacy indicators in Nepal show positive signs for the health of the banking sector as they remain above the minimum requirements. The total average capital-to-risk weighted assets ratio stands at 13.1 percent, surpassing the regulatory minimum of 11 percent. The maximum threshold of 100 percent capital-to-risk weighted assets ratio will be raised to Rs5 million from Rs2.5 million. The deposit collection rate has been lowered to 4.5 percent from 5.5 percent. The Cash Reserve Ratio (CRR) is set at 4 percent, requiring banks to hold that portion of their total deposits as cash reserves with the NRB. The statutory liquidity ratio (SLR) is set at 12 percent for commercial banks, while development banks and finance companies have an SLR of 10 percent. These reserve ratios are essential tools used by the NRB to regulate the money supply, stabilise the financial system and manage inflation by controlling the lending capacity of banks.

On-going concerns

NRB Governor Maha Prasad Adhikari stated that the real sector’s growth has not kept up with the rapid credit flow directed towards it. An abrupt slowdown in the share market and the real estate sector caused a credit surge and subsequent bust, impacting borrowers’ ability to meet loan and interest obligations and negatively affecting manufacturing, construction and trade. The IMF has expressed concern over significant credit fluctuations in Nepal’s financial sector, suggesting that excessive credit expansion and high borrowing rates have reduced borrower repayment capacity. To address the credit concern, the monetary policy states that the NRB will provide clear guidance on loan restructuring and rescheduling for hard-hit sectors and small and medium enterprises facing cash flow crises.

The non-performing loan (NPL) ratio in Nepal, at 2.6 percent, is notably lower than the average NPL ratio of 7.5 percent observed in emerging markets. This suggests that the overall asset quality in the banking sector is considered satisfactory. However, some measures such as classifying overdue loans as “standard” could mask the actual asset quality, and the NPL ratio might be artificially lower. The NRB aims to ensure that banks’ loan classification correctly reflects the asset quality of the banking system and will review the loan classification policy, implement Nepal Financial Reporting Standards (NFRS 9) and the expected credit loss model (ECL). Furthermore, the NRB will review the directed lending guidelines and credit concentration to guide BFIs to concentrate on credit management rather than credit creation.

Commendable step

The NRB has taken steps to decrease the number of microfinance institutions through mergers and acquisitions. As of mid-June 2023, 63 microfinance financial institutions are currently in operation. The NRB is committed to establishing a dedicated regulatory body for the cooperative sector, as outlined in the 2023-24 budget. The lack of regulation has resulted in the collapse of cooperatives and increased instances of fraudulent activities. It is necessary to establish a dedicated regulatory body to tackle these issues effectively. The NRB will also implement a centralised “Know Your Customer” (KYC) system, introduce Macro Stress Testing Framework, improve regulatory capacity, enhance the quality of supervision, and upgrade data and regulatory systems to improve its autonomy and accountability framework.

The NRB disclosed its intention to conduct research on the Central Bank Digital Currency (CBDC) in its monetary policy for the fiscal year 2021-22. The central bank has successfully prepared the concept report titled “Central Bank Digital Currency (CBDC): Identifying Suitable Policy Goals and Design for Nepal” to explore the implementation of the CBDC. On the digitalisation front, the NRB recently amended a digital payment licensing policy that will allow non-business businesses like hotels and travel to establish their digital payment system. Moreover, Nepal also inked an agreement with India, China and Sri Lanka for cross-border digital payment. These developments on the digital front facilitate smooth digital payment services inside and outside the country.

The NRB’s monetary policy presents several positive measures, and its effectiveness in implementing these measures will be crucial. Increased foreign reserves due to higher remittances and lower interest rates are gradually making the country’s economy vibrant. Lower interest rates can encourage borrowing and investment, potentially impacting consumer spending, business expansion and overall economic growth. The central bank appears mindful of the potential adverse effects of higher interest rates on economic recovery while remaining committed to keeping inflation in check. However, taming inflation will require a coordinated approach between monetary and fiscal policies.

– NISCHAL DHUNGEL

The opinion piece originally appeared in The Kathmandu Post on 4 July 2023. Please read the original article here.

A small landlocked country in East Africa, Rwanda has been on a remarkable transformational journey. Despite its chequered history, marked by the devastating genocide against Tutsi minorities in 1994, Rwanda has made significant strides in managing its debt burden, achieving impressive economic growth. The landlocked African republic also has some important lessons for Nepal, which endured a Maoist insurgency and decades-long political instability, on debt management and economic development.

Debt trajectory

One crucial factor contributing to Rwanda’s progress is its focus on reducing its debt burden. The country’s eligibility for the Highly Indebted Poor Countries (HIPC) Initiative in 2001 was a turning point. Rwanda received significant debt relief of $1.2 billion, providing a much-needed breathing space for development. The Multilateral Debt Relief Initiative (MDRI) further eased the burden by providing an additional $1.8 billion in debt relief.

Rwanda has reduced its debt-to-GDP ratio from over 100 percent in 1995 to 64 percent in 2022. The Covid-19 crisis led to a sharp increase in the fiscal deficit in 2020 due to revenue shortfalls and increased spending to address the crisis. Total nominal external debt to GDP stood at 75.7 percent at the end of 2021, of which external public and publicly guaranteed (PPG) debt accounted for 54.5 percent of GDP, resulting in the present value of PPG’s external debt to GDP ratio of 34.9 percent. While the increase in external PPG debt is concerning, debt management is done through loans in concessional terms with relatively low-interest rates and careful prioritisation and selection of capital-intensive projects.

However, the debt-to-GDP ratio is expected to continue rising due to the pressure of financing infrastructure development and social programmes, posing risks related to concessional financing availability, US monetary policy tightening, US dollar appreciation, and trade term shocks. As per the International Monetary Fund (IMF), Rwanda’s debt situation remains sustainable, with a moderate external and overall public debt distress risk.

Nepal’s debt trajectory

Nepal’s debt-to-GDP ratio declined from 64 percent in 2000 to 22.3 percent in 2015. As of mid-April 2023, the country’s overall outstanding debt stood at 38.3 percent of GDP, a significant increase from the debt-to-GDP ratio of 25 percent in 2016-17. The debt-to-GDP ratio has been rising due to the pandemic, the transition to federalism, the 2015 earthquake and the depreciation of the Nepali rupee. The fiscal deficit in the first half of 2023 increased the public debt-to-GDP ratio from an estimated 35.6 percent in 2022 to 38.3 percent in 2023. Total nominal external debt to GDP stood at 25.9 percent at the end of 2021, of which external PPG debt accounted for 21.8 percent, resulting in the present value of PPG’s external debt to GDP ratio of 13.1 percent.

Nepal’s external debt is lower than Rwanda’s but is growing faster. It is also more heavily concentrated on concessional terms. Domestic public debt (from 10.1 percent of GDP in FY 2015-16 to 22.2 percent in FY 2020-21) has increased faster than the external debt (from 14.9 to 21.8 percent of GDP) during the same period. Interest rates on domestic loans have also increased due to the government’s increased borrowing, which has crowded out private borrowers. The joint World Bank and IMF Debt Sustainability Analysis found that the risk of Nepal’s overall debt distress and risk of external debt distress is low, and its debt-carrying capacity is still strong. However, there are risks to Nepal’s debt sustainability, including a slowdown in economic growth, a decline in foreign aid and investment, an increase in interest rates, and a depreciation of the Nepalese rupee. Nepal can learn from Rwanda’s experience managing a high debt-to-GDP ratio while maintaining a rapidly growing economy.

Structural reforms

Rwanda’s implementation of structural reforms and debt relief resulted in remarkable economic growth, with an average annual GDP growth rate of 8 percent between 2000 and 2020. Between 2000 to 2022, Rwanda underwent significant structural changes, leading to a transformative shift in its economic landscape. During this time, there was a decline in the proportion of Rwanda’s GDP contributed by agriculture, forestry and fishing, dropping from 31.2 percent to 24.9 percent. Meanwhile, the industrial sector, which encompasses construction, increased its contribution from 16.8 percent to 21.2 percent. Moreover, there was a significant growth in the percentage of GDP represented by exports of goods and services, rising from 5.4 percent to 22.5 percent.

Rwanda’s key exports, such as coffee and tea, are predominantly sold in major markets such as the United States and Europe for coffee, Middle Eastern countries, and Pakistan for tea. Nepal can draw valuable lessons from Rwanda’s experience, particularly in implementing structural reforms, prioritising sectors for development, and determining essential export products.

Rwanda has made strides in developing e-government services by leveraging its existing technologies. In particular, the country implemented a comprehensive “one-stop” e-government initiative called “Irembo” in April 2014. Operating as a single portal, Irembo integrates 96 basic government services such as birth registration, business registration, tax filing and returns, and school enrollment, enabling around 9 million internet subscribers to access these services conveniently. Rwanda’s e-government systems have been acknowledged by the World Bank as a leading performer on the business reform index, enhancing the country’s appeal to investors. These advancements have streamlined administrative processes and fostered a culture of innovation and digital inclusion within the country.

Nepal can take inspiration from Rwanda’s success in developing e-government services, leveraging existing technologies to streamline administrative processes and enhance digital inclusion, ultimately attracting investors and fostering innovation.

Attracting FDI

Rwanda’s commitment to economic liberalisation and attracting foreign investment has driven its economic growth. Foreign direct investment (FDI) inflows increased from $100 million in 2008 to $398 million in 2022. Much of Rwanda’s foreign direct investment (FDI) is focused on specific sectors. Specifically, the energy sector represents 45 percent of all recorded investments, while manufacturing comprises 30 percent. Special economic zones offering tax breaks and incentives have further encouraged investment.

For instance, in 2000, the installed capacity of power plants in Rwanda was only 44 megawatts. Over the past two decades, the government has attracted significant FDI in the energy sector, which has helped increase the installed capacity to 225 megawatts. This has led to a substantial increase in electricity generation, and the electricity access rate has increased from 4.8 percent of the population in 2005 to 49 percent in 2022. By identifying sectors with growth potential and actively promoting investment in those areas, Rwanda has been able to drive economic expansion and create opportunities for job creation and technological advancements.

Despite both countries being landlocked and import-dependent, Rwanda has shown a way of achieving impressive economic growth while Nepal lags behind. Nepal should leverage the advantage of lower interest rates as envisaged in Nepal’s Medium Term Debt Management Strategy (MTDS) and implement structural reforms to reduce corruption, strengthen public financial management and improve the business climate. Enhancing the business environment, promoting digital platforms and establishing centralised investment-related services can attract foreign investment and boost economic growth. Nepal should address the rising debt burden by increasing tax revenue, reducing spending on non-essential items, and carefully prioritising and selecting projects.

– निश्चल ढुङ्गेल

यो लेख बैशाख १४, २०८० को नयाँ पत्रिका (१६औँ वार्षिकोत्सव विशेषांक) मा प्रकाशित भएको थियो। मूल लेख यहाँ पढ्नुहोस्

विश्व अर्थतन्त्र वस्तु, सेवा, पुँजी, मानिस, डाटा र विचारको विश्वव्यापी प्रवाहद्वारा अन्तर्सम्बन्धित छ । वस्तु र सेवाहरूको प्रवाहमा ग्लोबल भ्यालु चेन (विश्वव्यापी मूल्य शृंखला) निर्माण गरिएका छन् । ग्लोबल भ्यालु चेनले अन्तर्राष्ट्रिय उत्पादन साझेदारीलाई जनाउँछ, जहाँ उत्पादनलाई विभिन्न देशमा गरिएका गतिविधि र कार्यमा विभाजन गरिन्छ । हालैका विश्वव्यापी घटना (जस्तै : ऊर्जा संकट, चिप्स अभाव) ले ग्लोबल भ्यालु चेनमा तनाव सिर्जना गरेका थिए । विश्वव्यापीकरण विस्तारको अवधिमा, सस्ता वस्तु र कम श्रम लागतले मुद्रास्फीतिलाई नियन्त्रणमा राख्न मद्दत गथ्र्याे, तर अब यो प्रवृत्ति उल्टिन थालेको छ । युक्रेन युद्धलाई लिएर राष्ट्रहरूले रुससँग सम्बन्ध तोडेपछि तेल र ग्यासको मूल्य एकाएक बढ्यो । आपूर्ति शृंखला पुनर्निर्माण गर्दा व्यवसायले राजनीतिक तनावलाई तौलिरहेका छन् । नीति निर्माता र बजार दुवै महामारीको अस्थायी साइड इफेक्ट भनेर सोचिएको मुद्रास्फीति अनपेक्षित रूपमा बढेको देखेर छक्क परेका छन् ।

अन्तर्राष्ट्रिय मुद्राकोष (आइएमएफ)को ‘विश्व आर्थिक परिदृश्य’ प्रतिवेदनले विश्वव्यापी आर्थिक वृद्धि सन् २०२२ मा ३.४ प्रतिशत (अनुमानित) रहँदै सन् २०२३ मा २.९ प्रतिशत र २०२४ मा ३.१ प्रतिशतमा झर्ने अनुमान गरेको छ । २०२३ को पूर्वानुमान अक्टोबर २०२२ ‘विश्व आर्थिक परिदृश्य’मा गरिएभन्दा ०.२ प्रतिशत बिन्दु बढी तर ऐतिहासिक (२०००/१९) औसत ३.८ प्रतिशतभन्दा कम छ ।

तीन दशकमा प्रगति र समृद्धिलाई सशक्त बनाउने लगभग सबै आर्थिक शक्ति अहिले क्षयीकरणमा छन् । फलस्वरूप २०२२–३० बीचको औसत विश्वव्यापी सम्भावित कुल गार्हस्थ्य उत्पादन (जिडिपी) वृद्धि शताब्दीको पहिलो दशकको तुलनामा करिब एकतिहाइले घटेर वार्षिक २.२५ रहने अनुमान गरिएको छ । विश्वव्यापी वित्तीय संकट वा मन्दीको अवस्थामा यी गिरावट तीव्र हुनेछन् ।

विश्व अर्थतन्त्रमा माग र उत्पादनमा सबलतासँगै धेरै देशमा मुद्रास्फीति विस्तारै घट्ने क्रममा देखिन्छ । अमेरिकी र अन्य देशका केन्द्रीय बैंकहरूले कसिलो वित्तीय नीति अनुसरण जारी राखेका छन् । मुद्रास्फीतिसँग लड्न उन्नत, विकासशील र उदीयमान सबै देशका केन्द्रीय बैंकहरूले ब्याजदर बढाइरहेका छन् । सन् २०२३ को सुरुवातमा आर्थिक गतिविधिमा सुधार हुनुको एक प्रमुख कारक ऊर्जा र खाद्य मूल्यमा गिरावट आउनु हो । महामारीपछि वस्तुको माग क्रमशः बढ्नु र विश्वव्यापी आपूर्ति शृंखलाका अवरोध कम भएकाले अधिकांश देशमा वस्तुको मूल्य र मुद्रास्फीति घट्न थालेको छ । तर, श्रम बजारको लागतले मुद्रास्फीतिमा दबाब परेको देखिन्छ । स्फीतिको स्तर अझै युद्धपूर्वको भन्दा उच्च भए पनि यसले व्यवसाय र घरपरिवारको क्रयशक्ति बढाउँदै छ । विश्वव्यापी मुद्रास्फीति सन् २०२२ मा ८.८ प्रतिशतबाट सन् २०२३ मा ६.६ प्रतिशत र २०२४ मा ४.३ प्रतिशत हाराहारीमा रहने अपेक्षा गरिएको छ । अझै पनि विश्वव्यापी मुद्रास्फीति महामारीपूर्व (२०१७–१९) को स्तर ३.५ प्रतिशतभन्दा उच्च नै हो । चीनमा कोभिड–१९ महामारीको पछिल्लो लहरले सन् २०२२ को वृद्धिलाई कम गरे पनि आर्थिक गतिविधि सुरु गरेसँगै रिकभरी अपेक्षा गरिएभन्दा तीव्र बनेको छ । यसले विश्वव्यापी आर्थिक गतिविधिमा सकारात्मक प्रभाव पार्दै आपूर्ति शृंखलामाथिको दबाब कम गर्ने र अन्तर्राष्ट्रिय पर्यटनलाई बढावा दिनेछ ।

सकारात्मक पक्ष के भने धेरै अर्थतन्त्रमा कृत्रिम मागबाट बलियो वृद्धि वा मुद्रास्फीतिमा तीव्र गिरावट सम्भव छ । नकारात्मक पक्ष चीनमा गम्भीर स्वास्थ्य परिणामहरूले पुनर्बहालीलाई रोक्न सक्छ । युक्रेनमा रुसको युद्ध लम्बिँदा ऋण संकट अझ खराब बन्न सक्छ ।

कोभिड– १९ महामारीको प्रभाव विश्वव्यापी रूपमा कायमै रहेको समयमा युक्रेन युद्धले खाद्य र ऊर्जा बजार अवरुद्ध ग¥यो जसकारण विकासोन्मुख देशहरूमा खाद्य असुरक्षा र कुपोषणमा वृद्धि भयो । यसैबीच, जलवायु संकटले धेरै देशमा असर पर्न थालेको छ । डढेलो, बाढी, आँधी र तुफानहरूले ठूलो मानवीय र आर्थिक क्षति गरिरहेका छन् ।

आइएमएफले विकसित अर्थतन्त्रमा ब्याजदर वृद्धिले उदीयमान बजार र विकासोन्मुख देशहरूको वित्तीय अवस्थालाई असर पार्न थालेको उल्लेख गरेको छ । विशेषगरी अमेरिकाको बढ्दो ब्याजदरबाट मध्यम र न्यून आय भएका देशले थुप्रै दुष्प्रभाव साक्षात्कार गर्नुपर्नेछ । उनीहरूले पुँजी पलायन, ऋण संकट र मुद्रा अवमूल्यनजस्ता समस्या भोग्नुपर्नेछ । ब्याजदरमा तीव्र वृद्धिले विकसित देशहरू विशेषगरी अमेरिकामा ठूलो पुँजी प्रवाह हुन थालेको छ भने विकासोन्मुख देशहरूबाट पुँजी बाहिरिने क्रम बढेको छ । आर्थिक विस्तारका क्रममा देशको ऋण बढ्ने गर्छ । विशेषगरी विकासोन्मुख देशहरू तब ‘ऋण पासो’मा फस्न पुग्छन् जब उत्पादकत्व र ऋण सन्तुलनमा रहँदैन । यस्तो परिस्थितिमा विकसित अर्थतन्त्रमा ब्याजदर वृद्धि विकासोन्मुख अर्थतन्त्रका लागि घातकसिद्ध हुन सक्छ । उदाहरणका लागि सन् १९८० को प्रारम्भमा अमेरिकी केन्द्रीय बैंक (फेड)को ब्याजदर वृद्धिले संयुक्त राज्यमा दोहोरो अंकको मुद्रास्फीतिलाई घटायो, तर धेरै देशमा त्यसको नराम्रो असर प¥यो । विशेषगरी ल्याटिन अमेरिकी देशहरूमा ऋण डिफल्ट भयो । बेरोजगारी र गरिबी बढ्यो । जिडिपीमा ठूलो गिरावट आयो । यसैले त्यो अवधिलाई ‘हराएको दशक (लस्ट डिकेट)’ भन्ने गरिन्छ । ल्याटिन अमेरिकी देशहरू सुस्त र असमान पुनरुत्थानबाट गुज्रिएका थिए । अफ्रिकाका ऋणग्रस्त देशहरूले पनि ल्याटिन अमेरिकै नियति भोग्नुप¥यो । आइएमएफका अनुसार हाल लगभग कम आय भएका १५ प्रतिशत देशहरू ऋण संकटमा छन् र अन्य ४५ प्रतिशतले उच्च ऋण जोखिमको सामना गरिरहेका छन् ।

विशेषगरी अमेरिका र युरोपमा बैंकिङ प्रणालीमा थप उथलपुथलको सम्भावनाले आर्थिक गतिविधिमा असर पर्ने जोखिम छ । बैंक अफ अमेरिकाका अर्थशास्त्री डेभिड हौनरका अनुसार वित्तीय अस्थिरताले उदीयमान बजारमा पर्ने मुख्य असर दुई प्रकारका छन् । सकारात्मक असर, वित्तीय अस्थिरताले मुद्रास्फीति र ब्याजदर घटाउन मद्दत गर्न सक्छ । नकारात्मक असरमा उदीयमान देशहरूले बजारमा पहुँच प्राप्त गर्न कठिन हुन्छ ।

कोभिड– १९ महामारी, रुस–युक्रेन द्वन्द्व र अमेरिका र चीनबीचको बढ्दो तनावका कारण कतिपयले संसार डिग्लोबलाइज भइरहेको अनुमान गर्न थालेका छन् । अमेरिकाका दुई ठूला भूराजनीतिक प्रतिद्वन्द्वी चीन र रुस डलरको प्रभुत्वलाई सन्तुलनमा राख्न चाहन्छन् । रुसले रेन्मिन्बीलाई आफ्नो विदेशी विनिमय सञ्चिति, वैदेशिक व्यापार र केही बैंकिङ सेवामा मुख्य मुद्राका रूपमा अपनाएको छ । पश्चिमी प्रतिबन्धको सामना गर्न ऊ चीनतर्फ अग्रसर भएको छ । भर्खरै भारतले रुसलगायत थुप्रै देशसँगको व्यापारमा भारुको भुक्तानी संयन्त्र ल्याउने घोषणा गरेको छ । सन् २०२२ मा विश्वव्यापी विदेशी मुद्रा सञ्चितिमा डलरको हिस्सा ५५ प्रतिशत रहेको थियो । यसले वासिङटनलाई अतुलनीय आर्थिक र राजनीतिक शक्ति प्रदान गरेको छ । विश्व डिग्लोबलाइज भइरहेको संकेत देखिए पनि अमेरिकी डलरले लामो समयदेखि विश्वबजारमा महŒवपूर्ण भूमिका खेलिरहेको छ र यो कायम नै रहनेछ ।

घरेलु आर्थिक परिदृश्य : चुनौती र अवसर
नेपाल सरकारले आगामी आर्थिक वर्ष ०८०/८१ मा ६ प्रतिशतको वृद्धि प्रक्षेपण गरेको छ । गत आर्थिक वर्षमा नेपालको वृद्धिदर ५.८४ प्रतिशत थियो । विश्व बैंक र एसियाली विकास बैंक दुवैले सन २०२३ का लागि नेपालको आर्थिक वृद्धिदर ४.१ प्रतिशतमा संशोधन गरेका छन् । नेपालको प्रमुख आर्थिक परिसूचकमा केही सुधार आएको छ । यसले वित्तीय घाटालाई बिस्तारै घटाउँदै लगेको छ । जिडिपीमा कृषिको योगदान एकतिहाइबाट घटेर २२–२३ प्रतिशतमा पुगेको छ भने सेवा क्षेत्रको अर्थतन्त्रमा ६१ प्रतिशत र उद्योगको योगदान १३ प्रतिशत छ । औद्योगिक क्षेत्र सुस्त हुनुको मुख्य कारण निर्माण क्षेत्रको कमजोर वृद्धि नै हो । चालू आर्थिक वर्षको पहिलो त्रैमासमा मुलुकको कुल गार्हस्थ्य उत्पादनमा झन्डै सात प्रतिशत योगदान दिने निर्माण क्षेत्र २४ प्रतिशतले ऋणात्मक भएको केन्द्रीय तथ्यांक विभागले जनाएको छ । निर्माण क्षेत्रले विभिन्न समस्या भोगिरहेको छ । निर्माण सामग्रीको मूल्यमा उल्लेखनीय वृद्धि भएको छ ।

मुद्रास्फीति पनि उच्च रहने अनुमान गरिएको छ । मौद्रिक नीतिले मुद्रास्फीति सात प्रतिशतभित्रै सीमित लक्ष्य राखे पनि त्यो लक्ष्यभन्दा माथि नै छ । उपभोक्ता मूल्यस्फीति गत वर्षको ६.२४ प्रतिशतको तुलनामा सन २०२३ को फेब्रुअरीमा ७.८८ प्रतिशत रहेको छ । रुस–युक्रेन युद्धको असर नेपालजस्तो आयातमुखी अर्थतन्त्रमा बढी परेको छ । त्यसैले राष्ट्र बैंकले माग घटाउन ब्याजदर बढायो । बढ्दो ब्याज र घट्दो मागको गुणात्मक असरले बैंकको असुलीमै मार पर्न गयो । नीतिगत निर्णयले अन्योल बढ्नुका साथै व्यापारमा पनि कमी आएको देखिन्छ ।

आयात–निर्यातका साथै समग्र व्यापार घाटा कम भएको छ । चालू आर्थिक वर्षको पहिलो सात महिनामा व्यापार घाटा १८.७ प्रतिशतले घटेको देखिन्छ । आयात प्रतिबन्ध र सुस्त वृद्धिले पहिलो अर्धवार्षिकमा राजस्वमा नकारात्मक योगदान दिएको छ । २०२१/२२ मा लगाइएको आयात प्रतिबन्ध (जुन २०२२/२३ मा हटाइयो) ले चालू खाता घाटा कम गर्न र विदेशी विनिमय सञ्चितिलाई स्थिर राख्न त मद्दत ग¥यो । तर, यस नीतिको अनपेक्षित परिणामस्वरूप वित्तीय राजस्वमा ठूलो गिरावट आयो । २०२२/२३ को पहिलो ६ महिनामा आयात घट्दा वृद्धि सुस्तियो । यसबीच, रेमिट्यान्स आम्दानी २७.५ प्रतिशतले बढेको छ, जसले बाह्य क्षेत्रलाई स्थिर बनाउन मद्दत गरेको छ । पछिल्लो समय नेपालले मासिक एक खर्बभन्दा बढी रेमिट्यान्स भिœयाइरहेको छ । वैदेशिक रोजगारीमा जाने कामदारको संख्या बढेसँगै रेमिट्यान्स बढ्ने अपेक्षा गरिएको छ ।

पर्यटक आगमन पनि कोभिडपूर्वको स्तरमा पुग्न थालेको छ । यस वर्ष निजी क्षेत्रको आम्दानी घटेको र कर्पाेरेट कर पनि घट्दै गएकाले राजस्व बढाउन चुनौतीपूर्ण छ । यस वर्ष आयातबाट राजस्व बढ्ने कुनै संकेत छैन । नेपालको वित्तीय सुशासन निजी र सार्वजनिक दुवै क्षेत्रमा कमजोर भएको छ । देशको व्यापार घाटा बढ्दै गएको अवस्थामा बैंकिङ क्षेत्रको लगानी अनुत्पादक क्षेत्रमा गरिए देशले सोचेजस्तो आर्थिक प्रगति गर्न सक्दैन ।

आर्थिक जटिलता र महामारीका कारण हालै नेपालको सरकारी साधारण खर्च राजस्व आर्जन क्षमताभन्दा छिटो बढेको छ । नेपालले चालू आर्थिक वर्षमा निकै ठूलो राजस्व अभावको सामना गरिरहेको छ । अर्थ मन्त्रालय र महालेखानियन्त्रक कार्यालयका अनुसार चालू आर्थिक वर्षको पहिलो सात महिना (२०२२ को मध्यदेखि २०२३ मार्चसम्म)मा राजस्व परिचालन लक्ष्यको ४० प्रतिशत मात्रै रहेको छ । आव २०१६/१७ मा सार्वजनिक ऋण जिडिपीको २५ प्रतिशत थियो भने २०१९/२० मा उल्लेखनीय सार्वजनिक ऋण वृद्धिका लागि कोभिड महामारीको प्रभाव र त्योसँग जुझ्न अपनाइएका प्रक्रिया जिम्मेवार छन् । ०२०/२१ मा नेपालको ऋण जिडिपी अनुपात ३९ प्रतिशत पुग्यो ।

राजस्व आम्दानी घट्दा नेपाल सरकारलाई ऋण तिर्न र नयाँ ऋण लिन कठिन भएको छ । वैदेशिक सहायता अनुदान घटिरहेको अवस्था छ । आइएमएफले नेपालका लागि विस्तारित ऋण सुविधाअन्तर्गत ३९ करोड ५९ लाख डलर स्वीकृत गरेको थियो । हालैमा आइएमएफको बोर्डले विस्तारित ऋण सुविधालाई औपचारिक रूपमा अनुमोदन गरेको छ । कोभिड– १९ महामारीबाट नेपालको दृढ पुनरुत्थान र दिगो विकासलाई प्रवद्र्धन गर्न विश्व बैंकले १५ करोड डलरको विकास नीति ऋण स्वीकृत गरेको थियो । ब्याजदरमा वृद्धि हुँदै गर्दा बढ्दो ऋणले राष्ट्रको सरकारी बजेटलाई असर गर्छ ।

विदेशी विनिमय सञ्चितिको आधारमा देशको ऋणको अवस्थालाई विश्लेषण गर्नु पनि महŒवपूर्ण हुन्छ । अमेरिकी डलरको तुलनामा नेपाली रुपैयाँ कमजोर हुँदा स्थानीय मुद्रामा नेपालको ऋण दायित्व बढेको छ । अपर्याप्त आन्तरिक स्रोत परिचालन, अत्यधिक वित्तीय घाटा, निर्यात–आयात असन्तुलन, राजस्व र खर्चको अन्तरका कारण वैदेशिक ऋण थप बढेको हो । तसर्थ केही लेखकले दिगो आर्थिक वृद्धि र लगानीलाई हतोत्साहित गर्नुको सट्टा प्रोत्साहन गर्ने सम्भावना रहेसम्म घाटा वित्तपोषणलाई ध्यानमा राख्नुहुँदैन भनी तर्क गर्छन् । यसबाहेक, ऋण चुक्ता गर्ने क्षमतामा कुनै सुधार आउन सकेको छैन । कुल सार्वजनिक ऋणराशि र ब्याजमा वृद्धि भएको छ । अमेरिकी डलरको तुलनामा नेपाली रुपैयाँको अवमूल्यनले वैदेशिक ऋण महँगो साबित हुनेछ ।

नेपालले विदेशी मुद्रा सञ्चिति घट्न नदिन विलासिताका सामानको आयातमा प्रतिबन्ध लगाउनेजस्ता विभिन्न उपाय पनि अपनायो । विदेशी मुद्रा सञ्चिति बढेपछि प्रतिबन्ध हटाएको छ । अमेरिकी डलरको सट्टा भारत–बंगलादेशको व्यापारमा भारतीय रुपैयाँको प्रयोग परीक्षणको चरणमा छ । केही विषयमा द्विपक्षीय निर्णय गरेपछि मात्रै दुवै देशमा रुपैयाँको कारोबार सुरु होला । भारत नेपालको ठूलो व्यापारिक साझेदार हो र यो नीतिबाट नेपालले पनि ठूलो राहत पाउनेछ । यसले नेपाली मुद्राको अवमूल्यन कम बनाउन मद्दत गर्न सक्छ ।

निराशाजनक पक्ष के भने अर्थ मन्त्रालयले जारी गरेको विवरणअनुसार पछिल्लो सात महिनामा ८५ अर्ब ६० करोडभन्दा बढी बजेट सिद्धान्तविपरीत परिचालन भएको छ । राष्ट्रको सार्वजनिक ऋण बढ्ने क्रममा रहेको अवस्थामा सिद्धान्तविपरीत बजेट परिचालन गर्नु कत्ति जायज हुन्छ ? यसको जवाफ देश विकास गर्छु भनेर चुनिई आएका जिम्मेवार जनप्रतिनिधिले संसद्बाट जनतालाई पारदर्शी र जवाफदेही भएर अवगत गराउनुपर्छ ।

नेपालको प्रत्यक्ष वैदेशिक लगानी (एफडिआई) जिडिपीको ०.५ प्रतिशत छ, जुन दक्षिण एसियामा सबैभन्दा कम हो । एफडिआई थ्रेसहोल्ड एनपिआर दुई करोडमा घटाउँदा एफडिआईको प्रवाहमा थप कमी आउनेछ । पुँजी प्रवाहमा प्रतिबन्धले जिडिपीमा नकारात्मक प्रभाव पार्न सक्छ । सरकारले लामो समयदेखि थाती रहेको एफडिआईको सुधार गर्नुपर्छ । नियामक स्वीकृति प्रक्रियालाई सरल बनाउदाँ विदेशी मुद्रा प्रवाह बढ्नेछ । पुँजी र प्रविधिको आप्रवाहलाई प्रोत्साहित गर्नेछ ।

मौद्रिक नीतिले बैंकिङ र निजी क्षेत्रलाई वर्तमान वातावरणमा ऋण प्रयोग गर्दा बढी सावधानी र जवाफदेहिता अपनाउन निर्देशन दिनुपर्छ । तीन दशकसम्म कर्जा वृद्धि उच्च भए पनि आर्थिक वृद्धिदर ४.४ प्रतिशत मात्रै रह्यो । यसले हाम्रो कर्जा वृद्धि नीतिले आर्थिक वृद्धिमा सकारात्मक प्रभाव पार्न नसकेको देखाउँछ । आगामी दशकमा आर्थिक वृद्धिलाई प्रत्यक्ष रूपमा सहयोग गर्ने क्षेत्रमा ऋण प्रवाह केन्द्रित हुनुपर्छ । कर्जाको वृद्धि पनि निक्षेप वृद्धिसँग मिल्दो हुनुपर्छ । बैंकको चर्काे ब्याजविरुद्ध आन्दोलन चल्न थालेको छ र मिटरब्याजपीडित काठमाडौंमै आएर धर्ना दिने स्थिति राम्रो संकेत होइन ।

आइएमएफले नेपाल राष्ट्र बैंकले दिएको कर्जाको गुणस्तर शंकास्पद भएकाले देशका केही ठूला वाणिज्य बैंकलाई अन्तर्राष्ट्रिय लेखापरीक्षण संस्थाबाट लेखापरीक्षण गराउन आग्रह गरेको छ । कागजमा नेपालका बैंक तथा वित्तीय संस्थाको निष्क्रिय कर्जा (एनपिएल) अनुपात सहज छ । पुस मसान्तसम्ममा नेपाली बैंक तथा वित्तीय संस्थाको औसत निष्क्रिय कर्जा अनुपात २.७३ प्रतिशत मात्र रहेको केन्द्रीय बैंकले जनाएको छ । क, ख र ग वर्गका बैंक तथा वित्तीय संस्थामध्ये वित्त कम्पनीको खराब कर्जा (७.८२ प्रतिशत) अनुपात सबैभन्दा धेरै रहेको छ । वाणिज्य बैंक र विकास बैंकको खराब कर्जा अनुपात क्रमशः २.४९ र २.८२ प्रतिशत रहेको छ । आइएमएफले बैंक तथा वित्तीय संस्थाको वित्तीय स्वास्थ्यको वास्तविक तस्बिर जाँच्न गरेको पहल एकदम ठीक हो ।

नेपाल एउटा यस्तो राष्ट्र हो, जसलाई संरचनात्मक परिवर्तनको नितान्त आवश्यकता छ । समस्या मौलिक भएकाले संरचनात्मक सुधार नै छोटो र दीर्घकालीन जवाफ खोज्ने एक मात्र उपाय हो । भुक्तानी सन्तुलन कायम गरी बाह्य क्षेत्रमाथिको दबाब कम गर्न ऋण विस्तार र क्षेत्रगत वितरणको व्यवस्थापन, अत्यधिक आयात घटाउने र औपचारिक माध्यमबाट रेमिट्यान्स आप्रवाहमा सुधार गर्न आवश्यक छ । नयाँ जनगणनाअनुसार १५ देखि ५९ वर्षसम्मको सक्रिय उमेर समूह बढेको छ जुन कुल जनसंख्याको ६१.९६ प्रतिशत रहेको छ । जनसांख्यिक लाभांश पूर्ण रूपमा प्राप्त गर्न नेपाली युवाको सीपमा लगानी आवश्यक छ । हामीले नेपालको श्रमशक्तिलाई कृषि र गैरकृषि क्षेत्रबीच सन्तुलन कायम गर्दै उत्पादनशील क्षेत्रमा कसरी परिचालन गर्ने ? यो अहिलेको ज्वलन्त प्रश्न हो । विशेषगरी आर्थिक रूपमा सक्रिय जनसंख्यालाई रोजगारीको ग्यारेन्टी सरकारहरूको मूल मन्त्र हुनुपर्छ । रोजगारीको ग्यारेन्टी भनेको अर्थतन्त्रको उत्पादनशील क्षेत्रमा रोजगारी प्रवद्र्धन गर्न सरकारले अपनाउन सक्ने संरचनात्मक स्थिरता दिने वित्तीय नीति हो । नेपाली श्रम बजारले धेरै वर्षदेखि उच्च अनैच्छिक बेरोजगारी सामना गरिरहेको छ, जसलाई कोभिड– १९ महामारीले निस्सन्देह बढाएको छ ।

सरकारले यो वर्ष कर छली रोक्न र आफ्नो राजस्वको आधारलाई फराकिलो बनाउन संघर्ष गर्नुपर्नेछ  । अपेक्षितभन्दा उच्च मुद्रास्फीतिले घरायसी क्रयशक्ति घटाउने र आर्थिक वृद्धि घट्ने अनुमान गरिएको छ । नयाँ अर्थमन्त्रीले वित्तीय र मौद्रिक नीतिलाई ‘सिंक्रोनाइज’ गर्दै उत्पादनशील क्षेत्रमा लगानी बढाउन तरलता अभावलाई कम गर्नुपर्छ । व्यापार र प्रत्यक्ष वैदेशिक लगानीलाई प्रोत्साहन गर्ने वातावरण बनाउनुपर्छ । वित्तीय क्षेत्रको वृद्धि, मानव पुँजी निर्माण र सुशासन अभिवृद्धिमार्फत विकासको सम्भावना बढाउनुपर्छ ।

राष्ट्रले ऋण लिएको रकम उत्पादनशील क्षेत्रमा उपयोग गरी सरकारको ऋण न्यूनीकरणमा सहयोग गर्ने कार्यक्रम बनाउनुपर्छ । नेपालले सन् २०२६ मा एलडिसी समूहबाट बाहिरिने योजना बनाएकाले ऋण चुक्ता गर्न उत्पादक क्षेत्रमा लगानी गरेर दिगो अर्थतन्त्र निर्माण गर्नुपर्छ । यसका लागि लामो अवधि र न्यून ब्याजदरका ऋणबाट फाइदा उठाउनुपर्छ ।

– SANTOSH Sharma Poudel

The column originally appeared in The Diplomat on 27 April 2023. Please read the original article here.

Nepal is hosting the ACC (Asian Cricket Council) Premier Cup, the winner of which will qualify to participate in the Asia Cup, the cricket tournament in which Asia’s top six teams will contend for the title. Nepal is only two wins away from winning the ACC Cup. If it wins, it will play alongside India and Pakistan in the Asia Cup in September.

This marks a remarkable reversal in Nepal’s nascent cricketing fortunes. Just months ago, it was on the verge of losing its ODI (One Day International) status.

Unlike other South Asian countries, Nepal is not a cricketing power. But it hopes to be there in the coming years.

Cricket made its way to Nepal via the young Ranas, who came from Nepal’s ruling family and had gone to England and India (then a British colony) for higher education in the 1920s. The game was limited to the elites.

Cricket became popular among the masses only in the 1990s. Nepal became an associate member of the International Cricket Council (ICC), which governs global cricket, in 1996. Since then, cricket has captured the imagination of Nepali youth and has become the most popular sport in the country. Its popularity off-field has matched Nepal’s progress in the game. Nepal has scaled up the tiers of cricket and appeared in an ICC global event at the 2014 ICC World Twenty20, the game’s shortest format.

It gained ODI status in 2018. Currently, the ICC ranks Nepal 14th and 16th in the ODI and Twenty20 (T20) formats of the games, respectively.

Cricket has provided rare national unity and pride among Nepalis at home and abroad. The Nepali team’s performances have sparked hope and joy among Nepalis with little else to cheer for.

In a way, Nepali cricket reflects the challenges that the country faces.

First, there is limited infrastructure. Nepal had only two cricketing grounds where international matches were played for a long time. It has recently added a third ground. All three, however, can hardly be called modern stadiums by any standards.

Second, instability and mismanagement run deep. Monty Desai, the current national coach, is the seventh since 2018. The politicization of the Cricket Association of Nepal (CAN), the governing body for all cricket in the country, led to Nepal’s suspension in 2016 for breach of “ICC regulations which prohibit government interference and require free and fair elections.” Nepal was reinstated in 2019. Similarly, Nepal’s rollout of a T20 league, which held the inaugural tournament in December 2022-January 2023, was poorly organized. Some foreign players left mid-tournament over clashes with organizers, while other matches were affected by teams not paying the players’ salaries on time.

Third, corruption remains rife. The inaugural T20 tournament was a hotbed for spot-fixing, a practice of bribing players for specific actions during specific times to influence the betting results. A Central Investigation Bureau investigation unearthed that franchise owners and the Seven3Sports, an Indian company that was the commercial and strategic partner of the league, were engaged in the corrupt practice. Seven3Sports’ cofounder was the mastermind. Two former cricketers were arrested on a charge of supporting the fixers. It felt as if the whole league was organized to help corrupt betting practices.

Fourth, Nepal’s captain, Sandip Lamichhane, was accused of raping a minor and suspended from all cricketing activities following an arrest warrant issued against him in September 2022. Lamichhane, the most high-profile Nepali cricket player, has played in domestic leagues worldwide, including the Indian Premier League (IPL). Following the high court’s decision to grant him conditional bail, the CAN overturned his suspension. Nepali youth marched in protest against allowing an accused rapist on the team. Even the Scottish players refused to shake hands with Lamichhane before a match between the two nations in February.

Despite the challenges, the team has competed well on the field. The cricket-crazy Nepali crowd has provided excellent support. Spectators have flocked to matches, whether in Nepal or abroad, adorned with national flags, making deafening noise of support. Cricket is no longer just a sport in Nepal but a religion.

The cricket team’s challenges mirror Nepal’s struggles and the Nepali people’s hope, regardless of the conditions. Cricket fans have catapulted Nepali cricketers to the status of rock stars. The sport has brought the country together and given something to Nepalis to celebrate.

Even though the British colonizers left South Asia more than seven decades ago, their influence can be fully felt in cricket. Nepal’s rise makes it the sixth country in South Asia among the top 16 globally ranked cricket-playing countries.

Afghanistan’s ascent to the top was even steeper and quicker. In a 2010 meeting with then-Afghan President Hamid Karzai, former U.S. Secretary of State Hillary Clinton cited Afghan cricket as the model for Afghanistan to follow. “If we [the U.S. and Afghanistan] are searching for a model to meet international challenges with skill, dedication, and teamwork, we need only look to the Afghan national cricket team,” she said. In 2017, Afghanistan became a full member of the ICC, although that status is now imperiled by the Taliban regime’s refusal to allow women to play the sport.

Along with the economic center of gravity shifting to Asia, the center of global cricket has shifted to South Asia, particularly India. India generates around 90 percent of cricket’s global revenues. Add the mad love for cricket in Pakistan, Sri Lanka, Bangladesh, Afghanistan, and Nepal — the region is a cricketing behemoth.

While some critics in the West are not comfortable with the dominance of cricket by a non-White country, India has played a vital role in developing the game in the region. Nepal’s progress opens up further opportunities and the need for deeper cricketing cooperation in the region, especially in India. It would greatly support the development of Nepali cricket if India allowed some Nepali cricketers to participate in their domestic trophies. It would give Nepali cricketers greater exposure and a chance to compete with and learn from more skilled players. In addition, Nepal and India need to cooperate more closely to control corruption in the game.

– DHIROJ KOIRALA, TETSUSHI SONOBE, DIL RAHUT

This commentary originally appeared in the South China Morning Post on 27 April 2023. Read the original commentary here.

The Group of Seven (G7) leaders are set to meet in Hiroshima next month to contest daunting global challenges. The host city was hit by an atomic bomb almost 78 years ago, resulting in a historical tragedy. Those who visit the city will see a message to humanity etched on the Hiroshima Memorial Cenotaph: “Let all the souls here rest in peace, for we shall not repeat the evil.”

Today, we face another human-induced threat in climate change. As the world seeks to prevent the full-scale damage climate change is capable of, it seeks the kind of determination Hiroshima showed while rebuilding itself into a resilient, prosperous city. That is why it is vital to promote international cooperation, and G7 leaders must come to an agreement to scale up efforts on climate action.

The G7 bears the responsibility for leading efforts to reduce global carbon dioxide emissions as developed Western countries have emitted most of the world’s greenhouse gases since the start of the Industrial Revolution. We hope the G7 leaders can focus on having meaningful discourse on climate change, reaffirm their prior climate commitments and allow for the emergence of new commitments to help escape another human catastrophe.

The G7 also needs to accept that its members alone cannot limit global warming to 1.5 degrees Celsius. Recent scientific estimates show that doing so would require emissions reductions of around 43 per cent by 2030, relative to 2019 levels.

Therefore, the group needs to coordinate with developing countries. However, the reality is that geopolitical tensions between China and the United States, and Russia’s invasion of Ukraine, have hampered global emission-reduction efforts. Last year’s G7 summit in Germany included a pledge that the war would not hinder climate and biodiversity goals, and we hope the group proposes bold, pragmatic and tangible initiatives to achieve that.

Rising emissions from developing countries such as China and India are also complicating climate negotiations. It is imperative the G7 understands that these countries have their own growth concerns around emissions reductions. However, the group can encourage initiatives that promote climate-smart growth in developing countries. Bringing these initiatives to life will require the G7 and emerging economies to enhance communication and cooperation on climate finance, and research and development.

The G7 must also support low-income and vulnerable countries. It should propose establishing climate funds in coordination with major developing countries with high emissions to support climate initiatives in low-income economies. The Group of 20 meetings are an appropriate forum for expanding such cooperation.

In addition, the group should review the progress of its commitment to deliver US$100 billion per year through to 2025, made at the UN climate change conference in Copenhagen in 2009. Unfortunately, it has yet to fulfil this commitment on climate financing.

The G7 must take substantive steps to live up to this pledge and extend it well beyond 2025. It should also encourage countries – some of which are major emitters and close political allies – to align their nationally determined contribution with the 1.5-degree pathway if they have not yet done so.

G7 countries have agreed to uphold the Glasgow Climate Pact and phase down the use of coal power and inefficient subsidies for fossil fuels, hoping to achieve this by 2030 at the latest. They have committed to decarbonise their electricity sectors by 2035 and highly decarbonise road transport sectors by 2030. These commitments are crucial for achieving carbon neutrality, so the G7 should roll out further details of these plans and come up with ways to track progress on previous commitments.

Despite some shortcomings and a failure to deliver on its commitments, the G7’s vision for emissions reductions and commitment to decarbonisation are valuable and should not be forgotten. As a result, the team at the Asian Development Bank Institute is working to develop a dashboard to keep track of those visions and commitments.

Similarly, to support G7 commitments to fight climate change, the ADB has initiatives such as the Energy Transition Mechanism, a scalable, blended-finance instrument to step up the retirement of coal-fired power plants in the Asia-Pacific region. Towards that end, the ADB has joined the Global Energy Alliance for People and Planet to pledge US$35 million to help improve energy access and boost the green energy transition in South and Southeast Asia.

In October 2021, the ADB committed to provide US$100 billion in cumulative climate financing from its own resources to its developing member countries from 2019 to 2030. Multilateral agencies such as the ADB can support the G7 by bringing in new climate programmes and carrying out existing ones on climate finance in emerging economies.

The ADB is committed to working with the G7 and other partners to support climate-resilient growth and recovery in the Asia-Pacific region. Strong commitment, broader cooperation and concerted efforts at every level possible are the only way to reduce greenhouse gas emissions and ensure we do not “repeat the evil” – an important message that Hiroshima continues to provide.

– SAMJHANA Karki

The opinion piece originally appeared in the April 2023 Issue of New Business Age Magazine. Please read the original article here.

The probability of disasters occurring worldwide is increasing. The Annual Weather, Climate, and Catastrophe Insight Report 2023 revealed that natural catastrophes alone resulted in $313 billion in global economic losses. According to the Global Risks Report 2023, natural disasters and extreme weather events rank second in the top ten risks over the next two years. Whether caused by natural hazards such as earthquakes, landslides, hurricanes, and floods, or non-natural hazards such as industrial accidents, terrorist attacks, civil wars, and pandemics, disasters can have significant social, economic, and political consequences. The impacts of these events can have far-reaching and cascading effects on governance, power dynamics, and public policy.

The recent earthquake in Turkey and Syria has highlighted the impact of disasters on a country’s socio-economic status. According to the Global Rapid Post-Disaster Damage Estimation Report 2023 published by the World Bank, the two major earthquakes on February 6 caused direct physical damages estimated at $34.2 billion for Turkey, which accounts for four percent of the country’s 2021 GDP. Syria also experienced damages worth $5.1 billion.

South Asia has been experiencing a series of disasters that have had a significant impact on the region’s development. Unfortunately, poverty, inadequate infrastructure, and ineffective governance have worsened the consequences of these disasters. One major example of their devastating impact can be seen in Bangladesh, where around 7.2 million people were affected by flooding in June 2022. Similarly, Pakistan experienced historic floods the same year, resulting in damages and economic losses exceeding $30 billion.

Nepal is not immune to the consequences of disasters. It is among the 20 most multi-hazard-prone countries in the world. In 2015, the Gorkha earthquake and subsequent aftershocks caused the deaths of approximately 9,000 people and injured around 22,000. The disaster also resulted in loss and damage estimated at $7 billion, equivalent to one-third of Nepal’s GDP. Additionally, severe flooding in August 2017 affected 1.7 million people and caused loss and damage of $585 million, equivalent to three percent of Nepal’s GDP. Despite having a small population of 30 million, Nepal has faced significant impacts from disasters, resulting in high costs in terms of human life and economic damages.

Disasters have far-reaching consequences, affecting not only the physical environment but also the social and economic fabric of society. The loss of life, injuries, and displacement can cause significant trauma and mental health issues for individuals and communities. Disasters also disrupt businesses, leading to lost revenue and decreased productivity. This can result in reduced economic activity, job losses, and a decline in living standards. Additionally, disasters can have a significant impact on the country’s economy, leading to decreased agricultural output and slowed tourism activities.

The physical damage to infrastructure can also make it difficult for people to access essential services. For example, the floods and landslides of 2021 caused damage to physical infrastructure worth $9.9 million in Nepal, making it challenging for people to access critical services such as water supply and electricity. Furthermore, investment in disaster relief efforts, including search and rescue operations, emergency shelters, and reconstruction and rehabilitation, increases government spending. This can have implications for the country’s budget and development priorities.

Disasters can also worsen existing social inequalities, leading to unequal access to relief and rehabilitation measures. Individuals from so-called higher castes or with political affiliations may be more likely to receive humanitarian aid than the actual needy and affected population. This can lead to a breakdown in social order, and criminal activities may increase.

In addition, disasters disrupt the health sector, causing difficulties in accessing medical care, particularly for individuals with pre-existing health conditions. This leads to a significant impact on health outcomes, resulting in increased morbidity and mortality rates. Moreover, climate-induced disasters often force people to evacuate their homes and seek refuge in evacuation centres or camps. The overpopulation in these camps results in reduced access to safe water and sanitation facilities, increasing the risk of waterborne diseases. Therefore, the socio-economic impacts of disasters make people more vulnerable to future disasters.

Reducing Nepal’s vulnerability to disasters is a complex issue that requires a multi-faceted approach. The government has taken several steps to minimise the impact of disasters, including adopting the National Policy and Strategic Action Plan for Disaster Risk Reduction and Management (2018-2030), enacting the Disaster Risk Reduction and Management Act, establishing various Early Warning Systems, launching the BIPAD portal, creating the National Disaster Risk Reduction and Management Authority (NDRRMA), providing emergency response training to communities, and offering disaster response training. However, the implementation of these initiatives has been challenging due to insufficient coordination, resources, and capacity.

One of the ways forward to reduce the impact of disasters is increasing awareness among students. The Nepali curriculum and textbooks have not been fully disaster sensitive until now. Incorporating disaster risk reduction (DRR) education into the school curriculum is essential to building a more resilient society. DRR education enhances people’s awareness and knowledge about disasters and how to mitigate the hazards and consequences of such disasters. Schools can develop dedicated modules on DRR, Emergency Preparedness, and Crisis Management Plan (EPCMP). Games, simulations, and other activities (use of case studies and real-life disaster examples) can be done to illustrate concepts and principles related to DRR. This could help build our future generation to cope with the risks and impacts of disasters. Nepal can learn from Japan about incorporating DRR into the school curriculum.

Overall, reducing the impact of disasters requires a comprehensive approach that involves developing a disaster preparedness plan, conducting risk assessments, strengthening early warning systems, and establishing emergency response teams. Inclusive policies in DRR can help reduce the impact of disasters and promote inclusive and sustainable development. Collaboration between governments, the private sector, and educational and research institutes is crucial for disaster resilience. Additionally, prioritising community awareness is essential. Moreover, government and local representatives can play a crucial role in reducing disaster risk by promoting preparedness, coordinating responses, and advocating for policies and programs that support resilience.

– SANTOSH Sharma Poudel

The column originally appeared in The Diplomat on 18 April 2023. Please read the original article here.

Kathmandu has been abuzz with discussion about Prime Minister Pushpa Kamal Dahal’s visit to India. Initially planned for April, the visit has been postponed now to early May.

Since his swearing-in as Nepal’s prime minister in late December of last year, Dahal has publicly stated his interest in making New Delhi his first foreign destination. He has repeated this intention time and again.

Nepal’s prime ministers have traditionally chosen New Delhi for their first foreign trip. Dahal was the last prime minister to buck the trend when he assumed the role of prime minister for the first time in 2008. Then, he visited Beijing to attend the Olympics closing ceremony, drawing criticism at home and in New Delhi for flying first to Nepal’s northern neighbor, China.

India is so central in Nepal’s diplomacy and domestic politics that the first visit of a Nepali prime minister to New Delhi is assumed.

While newly appointed Nepali prime ministers often rush to visit India, New Delhi has not always shown similar urgency to meet them. Dahal’s immediate predecessor, former Prime Minister Sher Bahadur Deuba, had to wait nine months before he could visit India. Khadga Prasad Sharma Oli, who preceded Deuba, got to visit the Indian capital within two months after he became the premier. During his last tenure as prime minister (2016-17) Dahal got to visit New Delhi four months after he took over the reins.

India rushed to welcome Oli in 2018 because it wanted to rebuild ties with Kathmandu that had been severely strained by its blockade of landlocked Nepal in 2015. It also saw Oli as a powerful leader, potentially at the helm of the Nepali government for five years. New Delhi was proactive in seeking to ensure that Oli would not lean to Beijing as he did during his previous tenure (2015-16). Besides, the Indian government wanted to project successful diplomacy in its neighborhood.

What explains the delay in Dahal’s visit to New Delhi?

First, since becoming prime minister Dahal has spent his entire energy managing and surviving domestic politics. In the last four months, he has changed coalition partners and is yet to form a government fully. After the Oli-led Communist Party of Nepal-United Marxist Leninist (CPN-UML) withdrew from the government, Dahal was in charge of 16 ministerial portfolios, including foreign affairs. He finally appointed N.P. Saud of the Nepali Congress (NC) as the foreign minister on April 16. It is not a surprise then that without a lieutenant on his side, Dahal’s diplomatic plans suffered. The cabinet expansion is expected to be complete soon, so he can finally glance beyond domestic politics.

Second, Dahal’s grip over power appears tenuous. His party, the Communist Party of Nepal-Maoist Centre (CPN-MC) came in a distant third in the 2022 general elections, winning a mere 11 percent of the votes. While he was able to play on the insecurities of Deuba and Oli to propel himself to the prime minister’s post, his alliance with the Oli-led CPN-UML was a partnership of strange bedfellows, one that was doomed to fail given their past tumultuous relations and the fact that Dahal had a pre-poll alliance with the Deuba-led NC. With the NC actively looking to wedge them apart, the coalition soon fell. New Delhi might have calculated that there was little to gain from the visit of a flailing prime minister. India was therefore not in a hurry to meet Dahal.

Finally, five months after the general elections, Nepali politics look somewhat settled by Nepali standards. Hence, diplomacy, and the trip to New Delhi, is back among the priorities for the Dahal government.

Several outstanding issues in India-Nepal relations require immediate attention.

Among the primary concerns for Nepal is the connectivity: land, air, and power. The detailed project report for the 136-km-long Raxaul-Kathmandu broad-gauge railway is complete. India and Nepal will be holding a meeting of the joint working group on the railway project this week and expect to sign an agreement on the construction and funding modality during Dahal’s upcoming visit.

Nepal has been seeking Indian permission for air routes to efficiently operate the Gautam Buddha International Airport (GBIA) and Pokhara International Airport (both of which, incidentally, were built by Chinese firms). Nepal has requested India to provide three additional entry routes and an agreement on near-border operation for the GBIA to make international flights to the newly built airports economically feasible. Dahal would like to secure agreements for at least two entry points.

The two countries signed a Joint Vision Statement on Power Sector Cooperation during Deuba’s visit to New Delhi in 2022. Cross-border power transmission infrastructure and bi-directional power trade based on market demand are core components of the agreement. Based on it, India has permitted Nepal to export up to 364 MW of hydroelectricity. Nepal seeks to expand the scope and depth of the agreement. It seeks further Indian investment in hydroelectricity, permission for more energy exports to India, and Indian cooperation for exporting hydroelectricity produced in Nepal to Bangladesh via India.

The two neighbors had a fallout over the Agnipath scheme introduced last year. Under the scheme, the Indian Army recruits young soldiers (Agniveers) for four years, after which three in four Agniveers will retire from the Army with a $15,000 severance package. This goes against the 1947 tripartite agreement Nepal signed with India and the United Kingdom, which requires India and the U.K. to provide pensions to the Gurkha soldiers recruited from Nepal. As a result of the spat with India on the matter, India’s recruitment of Gurkhas from Nepal has been postponed since last year. Nepal would seek an amicable solution during the visit.

Besides these concerns, there are other stock issues, such as the territorial dispute along Nepal’s western border with India, border management, and a host of other economic issues to be dealt with. On top of that, the Dahal government will have to allay New Delhi’s apprehensions over Nepal’s increased engagement of Beijing and Washington. It will have to assure New Delhi that these engagements will not come at the cost of legitimate Indian interests in Nepal. These issues make Dahal’s visit to New Delhi in May critical.

Reports say that the visit dates have been finalized but will only be disclosed once some agendas get a concrete shape. Sherpas from both countries are working on the draft of the final agreement to be signed in New Delhi.

Dahal has shown his Machiavellian traits to become the premier. We will find out soon if he is any good at diplomacy.

– NISCHAL DHUNGEL

The opinion piece originally appeared in The Kathmandu Post on 13 April 2023. Please read the original article here.

The recently published Nepal Population and Housing Census 2021 shows an alarming trend: The population of children is decreasing, and the dependent population over 60 is increasing. In 10 years, the population under 14 dropped from 34.91 to 27.83 percent while the population over 60 rose from 8.13 to 10.21 percent. As the average life expectancy of citizens grows, the age imbalance in the population increases the state’s financial responsibility, primarily social protection, in future.

The window of opportunity for Nepal to take advantage of the demographic window is pretty small. To fully realise the demographic dividend, it is necessary to increase the domestic job environment and investment in the skills of Nepali youth. The government has two options with regard to job creation: Making the Prime Minister Employment Guarantee Programme more effective or creating a favourable environment for the private sector to create better jobs.

Job guarantee

On the one hand, Nepal’s share of economically active people working in the agriculture sector is decreasing due to increasing attractiveness in the service and industry sectors (according to the 2021 census, 57.3 percent of the population depends on agriculture). On the other hand, the share of the economically inactive population is found to be students, as well as those engaged in household work and family care, old age people, and persons with disabilities, etc. So the question is: How do we leverage Nepal’s labour force by employing them in productive sectors, striking a balance between the agriculture and non-agriculture sector?

In this regard, job guarantee is one of the structural stabiliser fiscal policies that the government can undertake to promote employment. With a basic wage and benefits package for anyone, especially the economically active population willing to work, a job guarantee should be the mantra of the government. The Nepali labour market has seen high involuntary unemployment rates for several years, and the Covid-19 pandemic has further aggravated it. A targeted job guarantee programme can be an effective and equitable policy for achieving full employment and reducing poverty and income inequality.

The government should work in partnership with companies in the private sector to implement creative employment interventions, such as skill development and job placement, that raise wages for workers and boost productivity at businesses in high-growth industries. While creating jobs, the government must check if employers adhere to employee welfare, labour rights, workplace safety, and social protection regulations. Building a solid base for employment opportunities helps the government generate revenue in the form of taxes.

Nepal is currently working with the World Bank to create an Integrated Social Registry, which can act as a platform to link social protection programmes and information systems and address several other issues, including those related to the front end (service delivery) and back end (information system). Touting social protection programmes looks politically appealing, but it is financially challenging. Promoting job guarantee would reduce the impact on the public budget, and employing the job guarantee workers on projects that encourage domestic production could minimise the trade balance.

Existing laws

Nepal’s social protection system comprises contributory social insurance for formal sector workers, non-contributory social assistance, and employment initiatives. Significant legislative reforms, such as the Contribution-based Social Security Act, Labour Act 2017 and the Civil Service Act (Third Amendment 2014), have been enacted to strengthen the country’s social protection system. The primary contributory social insurance programmes for formal private sector workers are the Social Security Fund (SSF) and the Employees’ Provident Fund (EPF) for public sector employees. The non-contributory side of the system is intended to benefit “the most vulnerable sectors of the population.” The four programmes, namely, medical, health and maternity protection, dependents protection, accident and disability protection, and old age protection, were also introduced. The social protection coverage rate is modest, with pensions having the highest coverage rate. Two recent guidelines, one pertaining to migrant workers and the other to those employed in the informal sector and who are self-employed, on expanding social security safety nets are a step in the right direction.

The gradual expansion of social security programmes over the years is a positive step towards ensuring social security and protection for the people. However, their effectiveness has been hindered by insufficient human resources, planning, and coordination. Human Rights Watch has pointed out that Nepal’s social protection system is inadequate in protecting children from poverty and perpetuates inequalities between formal and informal workers. The targeted programmes are often too narrow in scope, while the selection processes can be expensive, inaccurate, and susceptible to corruption. Additionally, many eligible individuals may face difficulty applying or choose not to apply due to the associated stigma. For example, social institutions and welfare policies may consciously or unconsciously stigmatise impoverished children, reinforcing their sense of failure and shame. This is especially so in cases where poverty is attributed to individual shortcomings rather than structural factors. Universal child benefits are more likely to foster social cohesion. They are cognisance recipients as rights holders entitled to support rather than merely beneficiaries, which can affect their civic engagement and the government’s accountability.

Past experiences

The Karnali Employment Programme (KEP) was designed similarly to the Prime Minister Employment Guarantee Programme currently implemented in Nepal, as it involved the creation of employment through infrastructure projects at the local level, resulting in the construction of physical assets. The KEP was marketed under the slogan “one family, one job” (Ek ghar, ek rojgar) and aimed to provide 100 days of employment to each participating household, specifically targeting households without any employed members. The programme provided a specified number of work days to participating households every year rather than a limited period of employment on a one-time basis.

Although KEP faced budgetary and operational constraints at the local level, which hindered its effectiveness in providing employment to all eligible households and compromised its performance as an employment guarantee scheme, these challenges should not be taken to mean that similar initiatives cannot be developed in Nepal. It is important to note that KEP was designed to address the historical underdevelopment of the Karnali region rather than to serve as a blueprint for a nationwide scheme in the future. Just like in Bangladesh, the government can prioritise certain sectors like the garment industry to create a favourable environment for the private sector or strengthen government-led employment programmes to create more jobs.

Most social protection is linked to formal employment. This social protection system exacerbates inequality since informal sector workers are likely to be poor due to low wages and unpredictable employment. Low minimum wages and good job opportunities in Nepal have led to large-scale out-migration. Hence, creating a favourable environment for the private sector to generate more work opportunities or strengthen government-led employment programmes is important. Domestic employment aids the government’s financial responsibility to support the social security system in Nepal.